From Iceland — British Law Firm Advises on Icesave Bill

British Law Firm Advises on Icesave Bill

Published December 22, 2009

With the Icesave bill still in the Finance Committee, a British law firm has commented on the text, and made a number of critical points against it.
Solicitors for Mishcon de Reya, who submitted their findings to the committee last Saturday, pointed out, among other things, that “Interest is charged at a fixed rate of 5.55% per annum from the date on which the first payment is made under the UK Loan Agreement. This appears to us to be a high interest rate which is commercially out of kilter with prevailing interest rates.”
In addition, they found that one clause of the proposed bill could allow former Landsbanki depositors to get back more money than they even put in. Specifically, they say, “provides that Landsbanki London depositors shall receive an amount equal to the excess amount paid to the creditor who received (or could have received) the excess amount. There are no provisions to pro rata the payments to the amount of the underlying claim and as a consequence (a) some depositors would be preferred over others, as the excess will be a larger proportion of smaller claims, and (b) it is possible that Landsbanki London depositors could receive more than the amount of their claim (for example, if there was a €10,000 excess payment made and a London depositor had initially had a claim for €25,000 he would receive the guaranteed minimum of €20,887 PLUS the additional €10,000 resulting in a total payment of €31,887 – a gain of €6,887)”
The entirety of the findings of Mishcon de Reya can be read from Vísir’s website, here.
The Icesave bill is still in committee, but might make it to the floors of parliament as early as this week.

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